Pyramid Schemes Galore

Nikkei: Online pyramid schemes proliferating in China

Amid fierce competition for shoppers' clicks and cash, smartphone-based pyramid schemes are proliferating in China as companies vie to lure customers to virtual shopping malls. With unscrupulous business practices rampant across the country in and out of cyberspace, consumers fall prey because they are more likely to trust information provided by people they know.

Users are recruited on WeChat, the popular mobile messaging app run by Tencent Holdings. Companies and individuals who engage in the schemes are called weishang, and anyone making a purchase of a mere 100 yuan ($15.19) can join the community to become one. A weishang creates a WeChat group, a closed online platform where friends and family with common interests can gather and chat, which serves as a foundation of intimacy and mutual trust.

Also: Fraudsters target China's retail investors

Retail investors in China are increasingly finding themselves the victims of wealth management fraud.

On the afternoon of April 6, dozens of investors gathered at the Bund, Shanghai's iconic waterfront, after news broke of Zhongjin Capital Management coming under police investigation. The asset management company had raised funds from investors online on the promise of low risks and high yields.

...The fund turned out to be nothing more than a pyramid scheme. Last year, the product -- which promised a yield of 40% per annum -- raised a total of 30 billion yuan ($4.57 billion).